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Thursday, June 29, 2017

First off: I'd like to correct a mistake I made in a recent update, when I posted an outdated chart - which must have been stored in my blogger console - from an update I did in May. It showed the NYSE breaking out above the 50 day moving average, after back-testing the bottom of the channel. That bullish chart worked like a charm, but that chart is history.

The long term channel on the NYSE is anything but bullish.

Here's the long term trend on the DOW.

Only an idiot would be buying the market up here, hoping for another false breakout, like the ones we saw in wave "3", and all we've seen over the past few months is every rally sold.

You don't normally see bearish traders take on large short positions going into a long holiday, so while I think the market can hold up for a few more weeks, my longer term outlook is bearish.

Technically speaking it doesn't take short sellers to take a market down, and if there's a lack of sellers, there's a lack of liquidity (lack of a bid underneath this market), and all it would take is a stampede for the exits to cause this market to fall into a death spiral, but that's highly unlikely.

I also believe bullish sentiment has to reach new recent highs, before we can see a major reversal.

Still someone may know something, and I suspect something big is about to happen (between the 4th of July, and the fall). Tensions between the United States, and Russia (in Syria & the Ukraine), have escalated to a fever-pitch, and the mainstream media has been selling a war with Russia for some time. The industrial military complex wants this, because war is their business, and there's lots of money to be made... just look at all the US generals who sit on the boards of defense contractor, Northrop Grumman, and the like.

Getting back to the charts:

I'm short term bearish after yesterdays pop higher, and especially bearish the $RUT where we saw the shorts squeezed out.

We caught a nice snap-back rally off the lows (near 2418 support), and the bottom of what looks like a contracting sideways triangle pattern - a difficult pattern to predict. This remains key support on the $SPX, so I'm expecting a pullback - into a wave b - but not much of one, now that the bears are trapped, and volume will be light, and volatility down, next week. The bulls typically move the market where ever they wish, once the bears leave town.

I have a couple different targets on this pullback - actually 3..:

$SPX - best case for the bulls is that wave "A" continues to run. See the blue channel (trend)

$SPX - worst case would be a retest of the lows, and if that level breaks, 2410 becomes support.

$SPX - The pullback target I'd like to see is 2434, or lower, but there are many possibilities today. Watch my twitter today, and I'll try to nail it down in real time.

$RUT - here's my short term target on the Russell 2000, and this looks like a better trade to me:

Keep a close eye on the $VIX, something I wasn't watching on Tuesday, when the market rolled over. It's up to you to sell when support breaks and the $VIX is popping, don't wait for me to tell you what to do... if you don't know how to trade you have no business trading this market, with real money. I normally trade a free virtual account at the CBOE, and I can tell you it's good practice. Save your money, because it takes money to make money. If you're trading less than 10k, you're woefully under funded, and by not trading you'll learn patience, and that will make you a better trader, once you're better prepared.

Tuesday, June 27, 2017

I stated this update last week, but never found the time to finish it. I have a lot on my plate right now, and charting 10 sectors at once is a full time job, in itself. I may have to postpone these daily updates for a while, but I'll still chart the opening bell, and tweet out some updated charts when I can.

If you
follow my twitter feed, you haven't missed much; the continued shakeout
in energy, the pullback in silver and gold, the snap-back rally in tech,
and the stealth rally in the biotech sector, just to name a few.

This has become a complicated market, and that probably has to do with the re-balancing that occurs this time of year, and the market setting up for a sector rotation, out of Tech, and Healthcare, and possibly REITS, and financials, and back into Energy. Looks like Energy is building a base, and that process could take a couple more weeks. Could happen earlier, as the short sellers get squeezed going into another holiday.

Last week - we saw tech stocks held down in a range, going into Friday Options Expiration, while at the same time we saw Biotech and healthcare topping out.

Once OPEX was over the market was driven above new support. There's no doubt in my mind that this was planned (rigged), but Markets are cyclical, and June "window dressing", is also playing
a role in this rally, as does, "mutual fund Monday", and if you don't
understand these terms, you should google (search) them, and I plan to
devote an entire chapter to the subject in my book.

The chart below shows precisely where the bid was raised above key (higher) support, so
that retail shorts, who didn't see this rally coming, would be forced to
cover, this also triggers computer buying... This is reminiscent of the
same kind of dirty tricks we've witnessed over the past 8 years, and especially on low summer volume,
and when trading into holidays, and the next one is the 4th of July - next week.

$NYSE My bullish outlook is confirmed by the NYSE daily candlestick chart - I tweeted out yesterday - and I see zero (0%) chance of a sell-off, when most traders are planning for another 2 week vacation.

$Oil - BRENT and WTI crude - trading in the same bullish pattern, and believe we've seen the bottom in oil, minus another little shakeout or 2.

If energy can join the party, this market can go much higher, and I
think we need to see bullish sentiment peak out, before we see a major
market reversal.

You would think the retail short sellers would learn, after a time, or
two, not to sell a dull market... many pro shorts are gone for the
summer, and that offers the bulls a golden opportunity to squeeze the
retail shorts.

Friday, June 16, 2017

Yesterday we saw market futures hammered down, followed by a surprise 12 point gap down at the open, and weak hands shaken out below the 2428 level. I was expecting a pullback, but not the rug being pulled out, but after a closer examination of the charts, it becomes obvious that hand-full of tech stocks have been heavily shorted, on light summer volume, going into this (June) OPEX. They took out several stops, and that resulted in a panic, and I like to buy when stocks are oversold.

If you were watching my twitter in pre-market: you saw some troll, who probably works for one of these unscrupulous hedge funds; trying to convince me than support was breaking down, even though I had identified key support on the $SPX as 2418, a day earlier. Epic fail..!

There are a few lessons to be learned from yesterday's theatrics:

Don't trust folks who tweet out emotional BS in my twitter feed

Don't try to distract me from the trade, especially in the morning, or you will be added to my black list

Only trust the charts.

This isn't the first time we've seen the hedgies try to throw me off the trade, and after blocking the latest fool... and confirming key support levels on several charts (including the Dow), we saw a 15 point rally off the lows. Winning!

This morning we see futures slightly higher, pressing up against resistance at the 2435 level, but I don't like the market here, and OPEX tends to be unpredictable, and pinned in a tight range. My advice it to sit on the sidelines, or take a 3 day weekend.

Yesterday I identified a contracting sideways triangle pattern on the chart, and that points to wave iv, as I had already suspected, and continued choppy trading, going into next week.

Not only are wave 4's hard to predict, so are pullbacks into wave "b". Not a good trading environment.

$SPX Wave C may have not even completed, and this could even turn into a down-turned triangle.

What ever has been beaten down the hardest is probably your best bet, and that's big tech.
CNBC reported this morning that tech was lower, but that's deceptive, and makes me wonder who's working behind the scenes, and loading the teleprompters.... The truth is, Tech has only pulled back after rallying off the lows, and that sets up for a continuing rally next week.

$NDX is sitting right on support in pink, at the bottom of the bullish channel in blue.

You may also find a trade in 3X miners NUGT

$GDX miners looks like it's trading into a complicated pattern, but if it breaks lower, cut your loses. This is one of the most volatile sectors of all, and the 3X leveraged funds are downright dangerous.

If you're interested in trading some other sector, I tweeted out practically everything on Thursday, including #Bitcoin Crushed as predicted. By far the best trade of the month, and possibly the year.

Odly enough, just after I tweeted out the above chart, that bitcoin index was driven up 9%, and that confirms in my mind that, I have a target on my head, but I would sell it again on this bounce. These hedge funds got nothing on me.

Wednesday, June 14, 2017

Trading into the Fed announcement

I spent most of the day, yesterday, troubleshooting some serious connectivity issues, and I consider it a miracle, that I was able to provide a market update yesterday morning. I didn't get my technical issues straightened out until around 9 PM, at which time I tweeted out the updated 1 min $SPX chart (below), and pointed out that the $VIX was down 10% from where I called it a (risky) sell on Friday. I don't suggest anyone should trade anything as volatile as the $VIX, or the leveraged $VIX (short), but whatever moves I guess...

In last nights tweet: I also predicted that the market is going to pause for a day - in a tight range (seen in purple). At that time I was unaware of the timing of today's Fed announcement, but it only makes sense that the market would consolidate going into the fed, before being given another green light.

$SPX 1 min chart worked flawlessly while I was away. That's going to make, getting caught back up to speed a lot easier.

Watch for the market to trade into a range in minuette wave "iv". This is actually a sub-minuette wave iv, but I like to annotate the charts, and speak in terms most people can understand, rather than use proper Elliott Wave annotations.

$INDU - the dow continues to break out to new highs

$NDX seen rallying off support.

Note that is the Fed chokes, and doesn't raise rates by at least a quarter point, Gold is going to spike on the news, but regardless... we should see a relief rally.

$Gold bounces off the 50 day ma - bullish

$USO - Oil breaks back down into what looks like a bearish channel. Upper blue channel line, and my red line, becomes resistance. Wave 3 should look like a crash, so anything less than that looks like more bullish consolidation. We'll get this trade sorted out shortly.

NATGAS - in the meantime - has proven to be the better short sale. I predicted this weeks ago.

There's a good chance financials are in a bear market, and any good news, already priced in. Sell the news?

$RIFIN - pullback into wave "iv" (of C)

$RUT - If the news is sold, and the market falls apart, risk off starts here.

Tuesday, June 13, 2017

Reviewing Friday's Flash-Crash in Tech

Friday's flash crash was limited to the semi-conductors, and the tech space. We saw a little follow through on Monday, but the selling was orderly, and fear was pretty well contained. Probably margin calls.... and pro shorts taking out certain targets on Apple, and where ever else they decided to shake out investors. No doubt this was planned, but it was also very predictable.

I've been pounding my fist over the over-bought tech sector, the $NDX, and $SOX, for a while now, and I didn't hesitate to call it - in real time - when I came out with a sell recommendation on $SOX at the open, before it had even rolled over. It was obvious that $SOX had over-shot the top of the channel (clearly over-bought), and that points to a pump and dump rally, and by the end of the day the triple leveraged bear ETF $SOXS was up 20% - off the lows of the morning. Not a bad day.

The rally in tech was over-extended. This was a technical correction. Don't tweet bearish news articles at me, after the fact. By the time you get the news, we've already priced it in. I blocked a long time follower just last week, for private messaging me, "$SOX is going up forever". I used to call myself the "Elliott Wave Hound" @elliottwavehound.com , and I will not be thrown off the scent, by such ridiculous nonsense, as random fake news stories, internet trolls, and overly emotional cupcakes.

Speaking of the fake news: I was watching Fox Business Friday, and heard them telling people not to sell... just as the selling in tech was accelerating, but they didn't even report on the crash itself until after the fall. They're as worthless as CNBC!

This isn't the first time I've called a flash-crash, and this was very small in comparison...

This may be the beginning of a larger correction, or the sector rotation, out of Tech, and into Energy. I predicted this in my most recent interview with Dale Pinkert, and I did hear some Money Manager talking "sector rotation", on Fox Business, in an interview yesterday. We did see energy higher on Friday, but it's too soon to say....

The bullish channel on tech isn't broken, so we could even see higher highs, and the broader market remains bullish. Maybe we see one more shakeout in Energy, before the big reversal? Too soon to say.

NASDAQ: Bullish channel in blue. Key support in pink.

Short term we should see a powerful snap-back rally (at least), going into #OPEX, The Fed, and end of the month (June window dressing).

You don't see high fliers like Expedia $EXPE selling off in a panic.

Even the trend on $SOX isn't broken.

Dow - key support 21150. Trend is up. Same goes for the $SPX. Key support is 2400.

Silver and Gold: The larger trend remains up. Very bullish

$GLD wants to consolidate higher, then maybe we see another shakeout, ahead of the next leg higher.

$OIl sitting right on support. I have conflicting charts on Oil. Short term trend may be down, but I can't confirm it. Opening bell just rang.

I'm in the middle of writing my first book, so I don't have as much time to blog as I used to, but I always have time for a morning update on my twitter feed @3Xtraders, and I'll continue to throw out some charts there. Watching, and charting the market, is a full time job, so it's impossible to do much during regular trading hours, but I only have so many hours before the opening bell.

I'd like to offer a special thanks to those who continue to donate to this website. I made some hardware upgrades over the weekend, and was feeling the pinch, until I checked my PayPal, and found over $500, in recent donations. Every little bit helps!

Wednesday, June 7, 2017

Not much selling, yet... we got the fed next week (causing some anxiety), and we usually see a little shakeout ahead of OPEX, which comes early this month, on the 16th.

This morning I expect the broader market to rally off short term support (in pink as always). What we saw was probably the little shakeout just mentioned in the previous sentence.

You'll notice I've updated the EW count to wave 4, and if that's correct, the market is likely going to continue to trade sideways - in a range. The jack-asses who don't have a chart to their name, like to call this, "the pause that refreshes"
$SPX 1 min chart

Key short term support is 2428. Resistance at 2436, and at the top of the range, around 2448.50. Pretty dull trading, which it typical in the summer, but as I suggested last week, in a dull market environment, you may be better off trading something a little more volatile... There's always a market somewhere.

The Russell 2000 held key support. If it breaks sell it. If it breaks out, buy it. I think there's a good chance we see another shakeout here, and in biotech.

$AMZN to rally off support at my pink line. This is a tell.

$SOX continues to lead tech higher. "The trend is your friend", but I wouldn't be caught chasing a wave 5. in an overbought market.

We caught a nice little reversal in Oil yesterday, and I'm expecting that to continue...

Miners look like they're trading into a powerful wave c/2, which is a suckers rally.

If miners continue to breakout, 212 becomes the target on the $HUI

I called this top on the $GDX, going into yesterdays close, but if miners continue to break out, look to the target on the $HUI.

Monday, June 5, 2017

Last week, after watching the S&P regain the 2400, and the DOW... 24000, I called for the market to continue to break out, and here we are.

It's not east to be bullish one week, and bearish the next, but Friday felt like capitulation for the retail short sellers, and the market has traded into what looks like a megaphone top, which can't be ignored, because this pattern points to a possible wave 5 triangle pattern. It's a tough pattern to identify, so I'm less than 50% certain, and most pro short sellers are on summer break. I warned folks not to sell a dull market (going into a holiday), and all we've seen over the past several weeks is short squeezes, in beaten up names, and even some high flyers, like Broadcom (up on news).

Getting back to this complicated topping pattern in wave 5 - there's also a good chance this is only wave "iii" (of V of 3), as illustrated in the chart below. If instead of stocks selling off into what looks like a crash, we only see a pullback to the bottom of the range (around the 2375 level), that would be a tell.

Even a pullback to 2325 doesn't rule out a broadening triangle pattern in wave 5, but only sets up for another short squeeze in July. This seems scenario seems even more likely, when you consider that Money Managers, are going to be forced to chase performance, when they return from summer break.
This hypothetical $SPX broadening top pattern is laid out in the chart below.

Short term resistance on the $VIX looks like 14.86, which would be high for this time of year (summer).

Oil - The oil trade seems more straight forward. This could be a pivotal day for Oil, and we've seen it go from green to red overnight. Good chance that's a bear trap.
Oil looks like it's traded into a wave A triangle (seen in purple). Wave B is a more complicated consolidation, and could take much longer to develop than my dotted lines depict. Wave B is not a great trade, but the first leg up should be a decent trade nonetheless.

Possible bear market in Financials, and a wave 3 of 3 would be devastating. The $RIFIN chart has also traded into an obvious bearish H&S pattern. Maybe financials lead the way down, maybe overbought $SOX, and tech.

Biotech and the $RUT had nice runs last week, as predicted, but I can only watch so many sectors at a time, and only so much time to write in the morning. If you want certain sectors charted, make a donation to this website, and I'll take it under consideration.
Thanks for following, AA

Thursday, June 1, 2017

The Perfect Setup

You don't hear me talk about catalysts much, because most catalysts are unknown until after a big market move, or a sentiment change. Let's say you see the market crashing, but there's absolutely no apparent reason for it... but once the market finds support, bad news breaks; this is where most retail investors will sell (at the bottom), but unless there's more bad news coming, that particular news is probably already, fully priced in. This is also the reason why, you have to, "trade the market you see, not the one you want".

News is priced in, by insiders, within the big banks, and other Washington insiders, and even congress who's allowed to legally trading on inside information.

This is how the deep state, profits by dishonest gains: Money rules Washington; the same corporate lobbyist who write the law, finance elections, so when regulations are ignored, it should be no surprise, congressional hearings only amount to dog and pony shows.... Minimal fines may be imposed, but nobody goes to jail, because they're all in on it!

Just yesterday another bank was fined for money laundering, but instead we're supposed to be outraged by the latest political stunt - pulled by Kathy Griffin - or more empty words, from a failed politician - Hillary Clinton. Fake News rules the day.

Getting back to the fake regulators, and the perfect setup, there's only on reason why energy has lagged the entire Trump rally, and that reason is over-regulation. It also explains why your electric bill has probably tripled over the past 8 years, under Obama, and his buddies overseas. Washington has continued to subsidize losers, like solar, and push nuclear energy, while making things more difficult for oil producers, and all in the name of "Climate Change". This is the gist of the Paris Climate Agreement, as France continues to push it's failed nuclear power agenda.

Whether Trump pulls out of the Paris Climate Agreement if still unknown, but based on what I'm seeing in the charts, the day's of over-regulation in the energy space has already come to an end, and that sets up for the next massive leg up in the energy rally, which started about the time the election began. Priced in at the end of 2016. This was the short sellers last chance to trash, coal, and energy.

This washout in the energy sector, was followed by massive short covering, and today, we've seen the energy sector give back 50% of that rally. That's a pullback.

Short term we've seen Oil rally off the lows, and pullback into wave 2, in a perfect FIB retracement

of 61.8% (the golden mean),

DOW Energy sector $DJUSEN - either pulling back into wave B, or 2 in a bullish channel.

Seeing a similar pullback in the lagging Biotech sector, and many beaten up names in the biotech space are $RUT components.

It's the perfect setup, for a sector rotation, and higher market highs.

If the Dow can find support here, and continue to run into July, where MM's will be forced to chase it, it can run to 23500.

Identical channel on the $RUT

The perfect setup.

We may see the market continue to trade in a range for the time being, or even anther shakeout, but there's a good chance yesterday's pullback is all we're going to get, and Trump is supposed to announce his decision on the Paris Climate Accord, as soon as this after-noon.

I didn't even get into the over-regulation of the auto makers, but Ford $F also looks strong here.

If I help you stay on the right side of the trade, please help support my efforts by making donation, using the PayPal link - in the left hand menu.

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About Me

I use a hybrid blend of technical indicators; cyclicality, sentiment, chart patterns, and more, to analyze the current market environment and provide short and long term outlook. It was never my intention to become a market timer, let alone try to make a living at it! It just came naturally. In 2010 I became a Hall of Fame Author at stochcharts.com after calling the flash crash, the subsequent rebound, and the eventual bottoming of the market in July of that same year. I drew quite a following, and needed more room to write, so I started this blog. Someone suggested I add a PayPal button, and the rest is history. This has all been a great learning experience, and I am very grateful for the opportunity. Please follow me on Twitter for the latest charts and my continuing up to the minute market outlook.